[BUNGE GRAPHIC OMITTED] CONTACT: Stewart Lindsay
Bunge Limited
1-914-684-3369
Stewart.Lindsay@Bunge.com
Bunge Reports Third Quarter 2005 Results
White Plains, NY - October 27, 2005 - Bunge Limited (NYSE:BG).
o Financial Highlights
(In millions, except per share data and percentages)
- ----------------------------------------- ------------------------- ------------- ----------------------------- ------------
Quarter Ended Percent Nine Months Ended Percent
9/30/05 9/30/04 Change 9/30/05 9/30/04 Change
- ----------------------------------------- ------------ ------------ ------------- -------------- -------------- ------------
Volumes (metric tons) 30.1 28.9 4% 88.9 82.5 8%
Net sales $6,226 $6,560 (5)% $17,549 $18,956 (7)%
Total segment operating profit(1) $151 $313 (52)% $467 $667 (30)%
Net income $170 $182 (7)% $381 $364 5%
Earnings per share(2) $1.41 $1.53 (8)% $3.18 $3.22 (1)%
- ----------------------------------------- ------------ ------------ ------------- -------------- -------------- ------------
Bunge's results included certain gains and charges that may be of interest to
investors. These items totaled $43 million, or $0.35 per share, in the quarter
ended September 30, 2005; $89 million, or $0.73 per share, in the nine months
ended September 30, 2005; $(2) million, or $(0.02) per share in the quarter
ended September 30, 2004; and $1 million, or $0.01 per share, in the nine months
ended September 30, 2004. Additional information is provided in the attached
schedule titled "Additional Financial Information."
- ----------
(1)Total segment operating profit is the consolidated segment operating profit
of Bunge's segments. Total segment operating profit is a non-GAAP measure and is
not intended to replace income from operations before income tax and minority
interest, the most directly comparable GAAP measure. The information required by
Regulation G under the Securities Exchange Act of 1934, including reconciliation
to income from operations before income tax and minority interest, is included
in the tables attached to this press release.
(2) Earnings per share (EPS) are reported on a fully diluted basis. See Note 1
to the consolidated statements of income attached to this press release for more
information.
o Overview
Alberto Weisser, Bunge's Chairman and Chief Executive Officer stated: "This
quarter Bunge faced some significant challenges, particularly in Brazil. We
believe these challenges are temporary and that the fundamentals in Brazil
remain good. On a global level, market conditions are solid.
"Throughout the year, Brazilian farm economics have been pressured by drought
conditions, an appreciating Brazilian real and lower soybean prices due to large
U.S. harvests. As a result, farmers have withheld crop sales. This has reduced
volumes and affected margins in our agribusiness operations. While fertilizer
volumes recovered with the new planting season, margins were negatively affected
by raw materials acquired earlier in the year and sold later at stronger real
exchange rates. We continue to take steps to address these challenges, including
reducing crushing capacity, lowering costs and managing our exposure to the
Brazilian real. The USDA predicts large crops in Brazil in 2006. Normal harvests
and stable exchange rates, even at current levels, should return both farmers
and Bunge to trend line performance.
"Global market fundamentals appear solid and point toward good conditions in
2006. The USDA estimates global demand for both soybean meal and vegetable oil
will rise by over 5% in the coming year. Demand for biodiesel is growing rapidly
and is benefiting vegetable oil margins, especially in Europe. Large grain and
oilseed crops in North America, Argentina and Europe should provide ample
commodity supplies.
"Short-term fluctuations in individual markets, usually induced by weather, are
to be expected in our business. Fortunately, conditions reset with the next
harvest and long-term trends carry on."
o Third Quarter Results
Agribusiness
Agribusiness results in this quarter were below the third quarter of 2004, which
was a period of extraordinarily strong results.
In Brazil, slow farmer selling reduced volumes and pressured margins. Costs
increased primarily due to the effects of a stronger Brazilian real on local
currency operating costs when translated into U.S. dollars. In the third quarter
of 2005, the average real-U.S. dollar exchange rate was R$2.34, compared to
R$2.98 in the third quarter of 2004, a 27% appreciation in the value of the
real versus the U.S. dollar. North American results, while good, were below last
year's high levels. European results benefited from record biodiesel margins.
Selling, general and administrative (SG&A) expenses declined due to reduced bad
debt expense and lower variable compensation expense. Freight management results
declined from last year
2
due to a decrease in ocean vessel freight rates and reduced agribusiness volumes
in Brazil.
Fertilizer
Fertilizer results in this quarter were weak despite improved volumes, which
increased only in the latter part of the quarter as farmers committed to
planting. Results suffered due to higher costs brought on primarily by an
appreciating Brazilian real. Local costs were higher when translated into U.S.
dollars. Fertilizer raw material inventory purchased earlier in the year in
anticipation of strong demand was sold at a stronger real-U.S. dollar exchange
rate later in the year, pressuring dollar margins. Delayed sales also increased
inventory carrying costs.
Edible Oil Products
Edible oil results improved in Brazil and North America due to higher volumes
and strong margins. Results were negatively affected by lower margins and
expensive raw materials in Eastern Europe. Costs increased due to higher energy
and SG&A expenses. The increase in SG&A expenses compared to the same period in
2004 was due primarily to increased employee costs in Europe related to building
a sales force in Russia, the effects of a stronger Brazilian real on local costs
when translated into U.S. dollars and higher advertising expenses in Poland.
Milling Products
Wheat milling results benefited from higher volumes and improved product mix in
Brazil.
Financial Costs
Interest income decreased primarily due to lower average balances of invested
cash. Interest expense increased primarily due to higher average borrowings.
Foreign exchange gains in the third quarters of 2005 and 2004 resulted from the
appreciation of the Brazilian real compared to the U.S. dollar on the net U.S.
dollar-denominated monetary liability position of Bunge's Brazilian
subsidiaries. Reduction in margins due to changes in inventory value
substantially offset these gains.
Other
Other income (expense) - net increased compared to the third quarter of 2004
primarily due to higher earnings from Bunge's German biodiesel joint venture and
gains on sales of assets in South America.
Income Taxes
Bunge's income tax benefit for the third quarter of 2005 reflects a $38 million
reduction in deferred tax asset valuation allowances stemming from a legal
restructuring initiated with the buyout of minority interests in 2004. Excluding
this item, the effective tax rate
3
for the third quarter of 2005 was 11% compared to 30% in the same period in 2004
and 32% for fiscal 2004. Also excluding this item, Bunge's effective tax rate
for the nine months ended September 30, 2005 was 22%. The decline in the tax
rate was primarily attributable to a reduction in earnings in higher tax
jurisdictions.
Minority Interest
Minority share of net income decreased when compared to 2004 due to lower
earnings from Bunge's less than wholly owned subsidiaries and the acquisition in
the third and fourth quarters of 2004 of the remaining 17% minority interest in
Bunge Brasil S.A. Bunge now owns 100% of Bunge Brasil.
Cash Flow and Net Financial Debt(3)
Net financial debt at September 30, 2005, increased $468 million from December
31, 2004, primarily due to lower cash balances, higher levels of inventory in
South America resulting from slower farmer purchases of fertilizer, the seasonal
purchase of agricultural commodity inventories and higher receivables.
Cash flow used by operations was $50 million for the nine months ended September
30, 2005, compared to $940 million provided by operations in the nine months
ended September 30, 2004. Cash flow from operations declined from last year's
extraordinarily high levels primarily due to higher working capital needs.
o Outlook
Bill Wells, Chief Financial Officer, stated, "2005 has been a challenging year,
particularly for our Brazilian agribusiness and fertilizer operations.
Nevertheless, market fundamentals point toward improved operating conditions in
2006.
"Agribusiness activity has shifted to the Northern Hemisphere, where solid
demand, large recent harvests and high biodiesel margins are positive for
results. In the edible oil sector lower new-crop seed prices and strong
vegetable oil demand should gradually help margins. We expect raw material
costs for our bottled oil business in Russia to decline substantially when our
new plant in Voronezh comes online in late 2006.
"The fourth quarter is still an important period for fertilizer sales. In
September, ANDA, the Brazilian fertilizer association, estimated industry retail
volumes would drop by 12% for the year. We expect Bunge's total fertilizer
volumes to be better than the industry. Margins will remain pressured until
inventory purchased at weaker real exchange rates is sold. We believe that most
of this inventory should be sold by year end.
- ----------
(3) Net financial debt is a non-GAAP financial measure and is not intended to
replace total debt. A definition of net financial debt and the information
required by Regulation G under the Securities Exchange Act of 1934, including a
reconciliation of net financial debt to total debt, the most directly comparable
GAAP measure, is included in the tables attached to this press release.
4
"Our 2005 guidance is as follows:
o Depreciation, Depletion and Amortization: $265 million to $275
million
o Capital Expenditures: $440 million to $460 million
o $150 million to $170 million maintenance, safety and
environmental capital expenditures
o Effective Tax Rate: 10% to 14%
o Joint Venture Earnings: $30 million to $35 million
"Assuming stable currencies in South America and Europe and normal 2005/2006
North American and European crops, our revised 2005 net income guidance is
$475 million to $495 million, representing $3.97 to $4.13 per share. This fully
diluted per share guidance is based on an estimated weighted average of
121 million shares outstanding and includes the weighted average common shares
issuable upon the conversion of Bunge Limited Finance Corp's 3 3/4% convertible
notes due 2022, which we intend to redeem on November 22, 2005."
Conference Call and Webcast Information
Bunge Limited's management will host a conference call at 10:00 a.m. EDT on
October 27, 2005 to discuss the company's third quarter results.
To listen to the conference call, please dial 800-819-9193. If you are located
outside of the United States, dial 913-981-4911. Please dial in five to 10
minutes before the scheduled start time. When prompted, enter passcode number
7968483. The conference call will also be available live on the company's Web
site at http://www.Bunge.com.
To access the webcast, click the "News and Information" link on the Bunge
homepage then select "Webcasts and Upcoming Events." Click the link for the "Q3
2005 Bunge Limited Conference Call," and follow the prompts to join the call.
Please go to the Web site at least 15 minutes prior to the call to register and
to download and install any necessary audio software.
For those who cannot listen to the live broadcast, a replay of the call will be
available beginning at 1:00 p.m. EDT on October 27, 2005 and continuing through
1:00 p.m. EST November 27, 2005. To listen to the replay, please dial
888-203-1112, or, if located outside of the United States, dial 719-457-0820.
When prompted, enter passcode number 7968483. A rebroadcast of the conference
call will also be available on the company's Web site beginning at 1:00 p.m. EDT
on October 27, 2005 and continuing through 12:00 p.m. EST on November 27, 2005.
To locate the rebroadcast on the Web site, click the "News and Information" link
on the Bunge homepage then select "Audio Archives" from the left-hand menu.
Select the link for the "Q3 2005 Bunge Limited Conference Call." Follow the
prompts to access the replay.
5
About Bunge Limited
Bunge Limited (http://www.Bunge.com) is an integrated, global agribusiness and
food company operating in the farm-to-consumer food chain. Founded in 1818 and
headquartered in White Plains, New York, Bunge has 25,000 employees and
locations in 32 countries. Bunge is the world's leading oilseed processor, the
largest producer and supplier of fertilizers to farmers in South America and the
world's leading seller of bottled vegetable oils to consumers.
Cautionary Statement Concerning Forward-Looking Statements
This press release contains both historical and forward-looking statements. All
statements, other than statements of historical fact are, or may be deemed to
be, forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These forward-looking statements are not based on
historical facts, but rather reflect our current expectations and projections
about our future results, performance, prospects and opportunities. We have
tried to identify these forward-looking statements by using words including
"may," "will," "expect," "anticipate," "believe," "intend," "estimate,"
"continue" and similar expressions. These forward-looking statements are subject
to a number of risks, uncertainties and other factors that could cause our
actual results, performance, prospects or opportunities, as well as those of the
markets we serve or intend to serve, to differ materially from those expressed
in, or implied by, these forward-looking statements. The following important
factors, among others, could affect our business and financial performance: our
ability to complete, integrate and benefit from acquisitions, divestitures,
joint ventures and strategic alliances; estimated demand for the commodities and
other products that we sell and use in our business; industry conditions,
including the cyclicality of the agribusiness industry and unpredictability of
the weather; agricultural, economic and political conditions in the primary
markets where we operate; and other economic, business, competitive and/or
regulatory factors affecting our business generally. The forward-looking
statements included in this release are made only as of the date of this
release, and except as otherwise required by federal securities law, we do not
have any obligation to publicly update or revise any forward-looking statements
to reflect subsequent events or circumstances.
6
Additional Financial Information
The following table provides a summary of certain gains and charges that may be
of interest to investors. The table includes a description of these items and
their effect on total segment operating profit, income from operations before
income tax and minority interest, net income and earnings per share for the
quarter and year ended September 30, 2005 and 2004.
- ------------------------------------- --------------------- --------------------- --------------------- -----------------------
Income From
Operations Before
Total Segment Income Tax and Earnings Per Share
(In millions, except per share data) Operating Profit Minority Interest Net Income Diluted (1)
- ------------------------------------ ---------------- ----------------- ---------- -----------
Quarter Ended Sept 30: 2005 2004 2005 2004 2005 2004 2005 2004
---- ---- ---- ---- ---- ---- ---- ----
Impairment charges (2) $ - $(3) $- $(3) $- $(2) $ - $(0.02)
Gain on sale of assets - - 7 - 5 - 0.04 -
Reversal of income tax
valuation allowances - - - - 38 - 0.31 -
---------- ---------- ---------- ---------- ---------- ---------- ------------ ----------
Total $- $(3) $7 $(3) $43 $(2) $0.35 $(0.02)
========== ========== ========== ========== ========== ========== ============ ==========
- ------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ------------ ----------
- ------------------------------------- --------------------- --------------------- --------------------- -----------------------
Income From
Operations Before
Total Segment Income Tax and Earnings Per Share
(In millions, except per share data) Operating Profit Minority Interest Net Income Diluted (1)
- ------------------------------------ ---------------- ----------------- ---------- -----------
Nine Months Ended Sept 30: 2005 2004 2005 2004 2005 2004 2005 2004
---- ---- ---- ---- ---- ---- ---- ----
Reversal of recoverable
tax valuation allowance $27 $- $27 $- $19 $- $0.16 $-
Value-added tax credits 28 - 28 - 17 - 0.14 -
Reversal of a transactional tax
provision 14 - 14 - 10 - 0.08 -
Impairment charges (2) - (3) - (3) - (2) - (0.02)
Gain on exchange of
Brazilian retail flour business - - - 5 - 3 - 0.03
Gain on sale of assets - - 7 - 5 - 0.04
Reversal of income tax
valuation allowances - - - - 38 - 0.31 -
---------- ---------- ---------- ---------- ---------- ---------- ------------ ----------
Total $69 $(3) $76 $2 $89 $1 $0.73 $0.01
========== ========== ========== ========== ========== ========== ============ ==========
- ------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ------------ ----------
(1) See Note 1 of Notes to the Consolidated Statements of Income.
(2) Impairment charges relate to the North American packaged oil operation.
7
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data and percentages)
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
---------------------------- Percent ---------------------------- Percent
2005 2004 Change 2005 2004 Change
-------------------------------------------------------------------------------
Net sales $6,226 $6,560 (5)% $17,549 $18,956 (7)%
Cost of goods sold (5,819) (6,007) (3)% (16,330) (17,542) (7)%
------------- ------------- ------------- -------------
Gross profit 407 553 (26)% 1,219 1,414 (14)%
Selling, general and administrative expenses (230) (231) -% (669) (601) 11%
Interest income 29 34 (15)% 78 74 5%
Interest expense (41) (40) 3% (130) (123) 6%
Interest expense on readily marketable inventories (15) (12) 25% (33) (43) (23)%
Foreign exchange gains (losses) 3 24 10 (56)
Other income (expense)-net 21 9 43 19
------------- ------------- ------------- -------------
Income from operations before income tax and
minority interest 174 337 (48)% 518 684 (24)%
Income tax benefit (expense) 18 (100) (78) (216) (64)%
------------- ------------- ------------- -------------
Income from operations before minority interest 192 237 (19)% 440 468 (6)%
Minority interest (22) (55) (60)% (59) (104) (43)%
------------- ------------- ------------- -------------
Net income $ 170 $ 182 (7)% $ 381 $ 364 5%
============= ============= ============= =============
Earnings per common share - basic (Note 1):
Net income per share - basic $ 1.53 $ 1.65 (7)% $ 3.43 $ 3.48 (1)%
============= ============= ============= =============
Earnings per common share - diluted (Note 1):
Net income per share - diluted $ 1.41 $ 1.53 (8)% $ 3.18 $ 3.22 (1)%
============= =============------------============= =============-----------
8
NOTES TO CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Note 1: Earnings per share are calculated on the basis of the following number
of common shares outstanding:
Quarter Ended Nine Months Ended
September 30, September 30,
--------------------------------- ---------------------------------
2005 2004 2005 2004
--------------- ---------------- --------------- ---------------
(In millions, except share data)
--------------------------------
Net income - basic $170 $182 $381 $364
Interest on convertible notes, net of 1 1 3 3
tax
--------------- ---------------- --------------- ----------------
Net income - diluted $171 $183 $384 $367
=============== ================ =============== ================
Weighted average number of common
shares outstanding:
Basic 111,361,292 110,080,027 111,035,635 104,530,750
Effect of dilutive shares:
-Stock options and awards 1,965,265 1,766,461 2,091,717 1,765,720
-Convertible notes 7,656,031 7,778,425 7,735,701 7,778,425
--------------- ---------------- --------------- ----------------
Diluted 120,982,588 119,624,913 120,863,053 114,074,895
=============== ================ =============== ================
Net income - per share:
-Basic $1.53 $1.65 $3.43 $3.48
=============== ================ =============== ================
-Diluted $1.41 $1.53 $3.18 $3.22
=============== ================ =============== ================
The calculation of diluted earnings per common share for the quarter
and nine months ended September 30, 2005 and 2004 includes the weighted
average common shares that are issuable upon conversion of Bunge's
3.75% convertible notes due 2022, which Bunge intends to redeem on
November 22, 2005.
CONSOLIDATED SEGMENT INFORMATION
(In millions, except volumes and percentages)
(Unaudited) (Note 1)
9
Set forth below is a summary of certain items in our consolidated statements of
income and volumes by reportable segment.
Quarter Ended Nine Months Ended
September 30, September 30,
------------- Percent ------------- Percent
2005 2004 Change 2005 2004 Change
------------ ------------ ---------- ------------ ------------- ----------
Volumes (in thousands of metric tons):
Agribusiness 23,744 22,770 4% 74,644 67,742 10%
Fertilizer 4,125 3,888 6% 7,781 8,282 (6)%
Edible oil products 1,303 1,246 5% 3,612 3,462 4%
Milling products 966 1,043 (7)% 2,895 3,043 (5)%
----------- ------------ ------------ -------------
Total 30,138 28,947 4% 88,932 82,529 8%
=========== ============ ============ =============
Net sales:
Agribusiness $4,204 $4,531 (7)% $12,760 $13,714 (7)%
Fertilizer 946 861 10% 1,780 1,751 2%
Edible oil products 853 958 (11)% 2,378 2,885 (18)%
Milling products 223 210 6% 631 606 4%
----------- ------------ ------------ -------------
Total $6,226 $6,560 (5)% $17,549 $18,956 (7)%
=========== ============ ============ =============
Cost of goods sold:
Agribusiness $(3,998) $(4,273) (6)% $(12,093) $(12,946) (7)%
Fertilizer (839) (645) 30% (1,506) (1,334) 13%
Edible oil products (791) (902) (12)% (2,194) (2,720) (19)%
Milling products (191) (187) 2% (537) (542) (1)%
----------- ------------ ------------ -------------
Total $(5,819) $(6,007) (3)% $(16,330) $(17,542) (7)%
=========== ============ ============ =============
Gross profit:
Agribusiness $206 $258 (20)% $667 $768 (13)%
Fertilizer 107 216 (50)% 274 417 (34)%
Edible oil products 62 56 11% 184 165 12%
Milling products 32 23 39% 94 64 47%
----------- ------------ ------------ -------------
Total $407 $553 (26)% $1,219 $1,414 (14)%
=========== ============ ============ =============
Selling, general and administrative expenses:
Agribusiness $(109) $(129) (16)% $(327) $(334) (2)%
Fertilizer (52) (55) (6)% (157) (124) 27%
Edible oil products (54) (37) 46% (146) (111) 32%
Milling products (15) (10) 50% (39) (32) 22%
----------- ------------ ------------ -------------
Total $(230) $(231) -% $(669) $(601) 11%
=========== ============ ============ =============
Foreign exchange gain (loss):
Agribusiness $10 $26 $36 $(24)
Fertilizer (4) (4) (20) (28)
Edible oil products - - - -
Milling products - - (1) -
----------- ------------ ------------ -------------
Total $6 $22 $15 $(52)
=========== ============ ============ =============
Interest income:
Agribusiness $7 $13 (46)% $20 $18 11%
Fertilizer 15 12 25% 38 32 19%
Edible oil products 1 - 100% 2 6 (67)%
Milling products - - -% 1 3 (67)%
----------- ------------ ------------ -------------
Total $23 $25 (8)% $61 $59 3%
=========== ============ ============ =============
Interest expense:
Agribusiness $(42) $(27) 56% $(104) $(87) 20%
Fertilizer (6) (14) (57)% (29) (34) (15)%
Edible oil products (6) (11) (45)% (22) (25) (12)%
Milling products (1) (4) (75)% (4) (7) (43)%
----------- ------------ ------------ -------------
10
Quarter Ended Nine Months Ended
September 30, September 30,
------------- Percent ------------- Percent
2005 2004 Change 2005 2004 Change
------------ ------------ ------------ -------------
Total $(55) $(56) (2)% $(159) $(153) 4%
=========== ============ ============ =============
- -------------------------------------------------------------------------------------------------------------------------------
Segment operating profit:
Agribusiness $72 $141 (49)% $292 $341 (14)%
Fertilizer 60 155 (61)% 106 263 (60)%
Edible oil products 3 8 (63)% 18 35 (49)%
Milling products 16 9 78% 51 28 82%
----------- ------------ ------------ -------------
Total (Note 2) $151 $313 (52)% $467 $667 (30)%
=========== ============ ============ =============
- -------------------------------------------------------------------------------------------------------------------------------
Income from operations before income tax and
minority interest:
Segment operating profit $151 $313 $467 $667
Unallocated income (expense) - net (Note 3) 23 24 51 17
----------- ------------ ------------ -------------
Income from operations before income tax and
minority interest $174 $337 $518 $684
=========== ============ ============ =============
Depreciation, depletion and amortization:
Agribusiness $27 $22 23% $80 $63 27%
Fertilizer 27 17 59% 76 51 49%
Edible oil products 12 11 9% 35 31 13%
Milling products 4 3 33% 10 9 11%
----------- ------------ ------------ -------------
Total $70 $53 32% $201 $154 31%
=========== ============ ---------- ============ ============= ----------
11
NOTES TO THE CONSOLIDATED SEGMENT INFORMATION
(Unaudited)
Note 1: In the first quarter of 2005, Bunge reclassified certain agribusiness
product lines from the edible oil segment to the agribusiness segment.
As a result, amounts for the quarter and nine months ended September
30, 2004 have been reclassified to conform to the quarter and nine
months ended September 30, 2005 presentation.
Note 2: Total segment operating profit is the consolidated segment operating
profit of all of Bunge's operating segments. Total segment operating
profit is a non-GAAP measure and is not intended to replace income from
operations before income tax and minority interest, the most directly
comparable GAAP measure. The information required by Regulation G under
the Securities Exchange Act of 1934, including the reconciliation to
income from operations before income tax and minority interest, is
included under the caption "Reconciliation of Non-GAAP Measures".
Note 3: Includes interest income, interest expense and foreign exchange gains
and losses and other income and expenses not directly attributable to
Bunge's operating segments.
12
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
September 30, December 31, September 30,
2005 2004 2004
----------------- ------------------ ------------------
ASSETS
Current assets:
Cash and cash equivalents $326 $432 $610
Trade accounts receivable 2,081 1,928 1,936
Inventories 3,049 2,636 2,775
Deferred income taxes 148 95 111
Other current assets 1,715 1,577 1,609
----------------- ------------------ ------------------
Total current assets 7,319 6,668 7,041
Property, plant and equipment, net 2,952 2,536 2,138
Goodwill 194 167 248
Other intangible assets, net 184 156 110
Investments in affiliates 583 564 566
Deferred income taxes 359 273 262
Other non-current assets 612 543 443
----------------- ------------------ ------------------
Total assets $12,203 $10,907 $10,808
================= ================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $552 $541 $150
Current portion of long-term debt 213 140 122
Trade accounts payable 2,027 1,898 2,262
Deferred income taxes 100 38 33
Other current liabilities 1,260 1,285 1,446
----------------- ------------------ ------------------
Total current liabilities 4,152 3,902 4,013
Long-term debt 2,875 2,600 2,634
Deferred income taxes 233 232 200
Other non-current liabilities 594 518 453
Minority interest in subsidiaries 331 280 408
Shareholders' equity 4,018 3,375 3,100
----------------- ------------------ ------------------
Total liabilities and shareholders' equity $12,203 $10,907 $10,808
================= ================== ==================
13
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended
September 30,
----------------------------
2005 2004
------------- -------------
OPERATING ACTIVITIES
Net income $381 $364
Adjustments to reconcile net income to cash (used for)
provided by operating activities:
Foreign exchange (gains) losses on debt (177) 8
Bad debt expense 24 30
Depreciation, depletion and amortization 201 154
(Decrease) increase in the allowance for recoverable
taxes (27) 1
Deferred income taxes (80) (49)
Minority interest 59 104
Changes in operating assets and liabilities, excluding the
effects of acquisitions:
Trade accounts receivable (99) (444)
Inventories (216) 44
Prepaid commodity purchase contracts (60) 221
Advances to suppliers 148 (303)
Trade accounts payable (68) 622
Other - net (136) 188
------------- -------------
Cash (used for) provide by operating activities (50) 940
INVESTING ACTIVITIES
Payments made for capital expenditures (342) (208)
Acquisitions of businesses and other intangible assets (29) (329)
Investments in affiliates (2) (23)
Related party loans (repayments) 13 (46)
Proceeds from disposal of long-lived assets 10 11
------------- -------------
Cash used for investing activities (350) (595)
FINANCING ACTIVITIES
Net change in short-term debt 11
(735)
Proceeds from long-term debt 1,195 856
Repayments of long-term debt (845) (635)
Proceeds from sale of common shares 12 339
Dividends paid to shareholders (46) (36)
Dividends paid to minority interest (44) (36)
------------- -------------
Cash provided by (used for) financing activities 283 (247)
Effect of exchange rate changes on cash and cash
equivalents 11 23
------------- -------------
Net (decrease) increase in cash and cash equivalents (106) 121
Cash and cash equivalents, beginning of period 432 489
------------- -------------
Cash and cash equivalents, end of period $326 $610
============= =============
14
Reconciliation of Non-GAAP Measures
This earnings release contains total segment operating profit, net financial
debt and net financial debt less readily marketable inventories, which are
"non-GAAP financial measures" as this term is defined in Regulation G of the
Securities Exchange Act of 1934. In accordance with Regulation G, Bunge has
reconciled these non-GAAP financial measures to the most directly comparable
U.S. GAAP measures.
Total Segment Operating Profit
Total segment operating profit, which is the consolidated segment operating
profit of all of Bunge's operating segments, is Bunge's consolidated income from
operations before income tax and minority interest that includes an allocated
portion of the foreign exchange gains and losses relating to debt financing
operating working capital, including readily marketable inventories. Also
included in total segment operating profit is an allocation of interest income
and interest expense attributable to the financing of operating working capital.
Total segment operating profit is a non-GAAP financial measure and is not
intended to replace income from operations before income tax and minority
interest, the most directly comparable GAAP financial measure. Total segment
operating profit is a key performance measurement used by Bunge's management to
evaluate whether operating activities cover the financing costs of its business.
Bunge believes total segment operating profit is a more complete measure of its
operating profitability, since it allocates foreign exchange gains and losses
and the cost of debt financing working capital to the appropriate operating
segments. Additionally, Bunge believes total segment operating profit assists
investors by allowing them to evaluate changes in the operating results of its
portfolio of businesses before non-operating factors that affect net income.
Total segment operating profit is not a measure of consolidated operating
results under U.S. GAAP and should not be considered as an alternative to income
from operations before income tax and minority interest or any other measure of
consolidated operating results under U.S. GAAP.
Below is a reconciliation of income from operations before income tax and
minority interest to total segment operating profit:
Quarter Ended Nine Months
September 30, Ended September 30,
----------------------- -------------------------
(In millions) 2005 2004 2005 2004
---------- --------- ----------- ----------
Income from operations before income tax and
minority interest $174 $337 $518 $684
Minus: Unallocated (income) expenses - net (1) (23) (24) (51) (17)
---------- --------- ----------- ----------
Total segment operating profit $151 $313 $467 $667
========== ========= =========== ==========
__________
(1) Includes interest income, interest expense and foreign exchange gains
and losses and other income and expenses not directly attributable to
Bunge's operating segments.
Net Financial Debt
Net financial debt is the sum of short-term debt, current maturities of
long-term debt and long-term debt, less cash and cash equivalents and marketable
securities. Net financial debt is presented because management believes it
represents a meaningful measure of Bunge's leverage capacity and solvency. Net
financial debt is not a measure of solvency under U.S. GAAP and should not be
considered as an alternative to total debt as a measure of solvency.
Net financial debt less readily marketable inventories (RMI), or net financial
debt less RMI, is the sum of short-term debt, current maturities of long-term
debt and long-term debt, less cash and cash equivalents, marketable securities
and readily marketable inventories. Net financial debt less RMI is presented
because management believes it represents a more complete picture of Bunge's
leverage capacity and solvency since it adjusts for readily marketable
inventories. Readily marketable inventories are agricultural inventories that
are readily convertible to cash because of their commodity characteristics,
widely available markets and international pricing mechanisms. Net financial
debt less RMI is not a measure of leverage capacity and solvency under U.S. GAAP
and should not be considered as an alternative to total debt as a measure of
solvency.
15
Below is a reconciliation of total long-term and short-term debt to net
financial debt and to net financial debt less readily marketable inventories:
September 30, December 31, September 30,
(In millions) 2005 2004 2004
------------- --------------- ----------------- ---------------
Short-term debt $552 $541 $150
Long-term debt, including current portion 3,088 2,740 2,756
--------------- ----------------- ---------------
Total debt 3,640 3,281 2,906
Less:
Cash and cash equivalents 326 432 610
Marketable securities 11 14 11
--------------- ----------------- ---------------
Net financial debt 3,303 2,835 2,285
Less: Readily marketable inventories 1,690 1,264 1,503
--------------- ----------------- ---------------
Net financial debt less readily marketable
inventories $1,613 $1,571 $782
=============== ================= ===============
16